Tag Archives: Thailand

Economics of intellectual property laws

As reported in the Wall Street Journal, Thailand has strengthened its intellectual property laws.  Long considered one of the worst countries for property laws, the article focuses on the country’s recent efforts in copyright law as related to music. Long considered a hotbed for piracy and counterfeit merchandise, this could signal that one emerging market is ready to grow.

The United States has some of the best property rights in the World.  However, in some cases, even the holders of some US copyrights have found that it is best not to defend them.  As the RIAA has found out, it may not be worth the trouble.  Thailand is responding to lawsuits brought by GMM Grammy, a Thai record label, against local performers who have been playing “…whatever people want to hear”.  These lawsuits are unpopular with the public, who compare the music style to American Jazz.  Music aside however, what might the economic ramifications be if Thailand was actually serious about protecting intellectual property?

Upon closer inspection, Thailand’s copyright laws rank a mathematically impossible 23rd out of 18 in its region. Typo aside, Thailand would seem to be in desperate need of property laws. Research by Keith Maskus shows that they could see more benefits then just the musical innovation.  Intellectual property laws by themselves don’t stimulate foreign investment in developing countries; If that where the case, Botswana would have more foreign investment then Italy.  Maskus’s research shows that while ultimately it is a choice at the firm level about whether to directly invest in a foreign country or not, the level of legal protection must be considered.

If the country can manufacture modern goods, as well as having a market to sell them in, then property laws can provide incentive for foreign investment.   Thailand fits this definition.

Even if the effect of enhanced IP laws isn’t foreign investment, there are still very compelling economic reasons for Thailand to protect its ideas.  Such laws encourage innovation as opposed to imitation, as well as ensure that those responsible for an idea get compensated for their work.  While IP laws can be imposed to early, creating economic inefficiencies, Thailand may have developed enough to warrant some protection, and that is something they should use as a sign of their economic success.

Emerging markets have been taking a beating recently.  Recent political unrest has resulted in a worsening economic outlook for Thailand.  Thailand can reverse this course and return to being the fastest growing economy in the world.  Thailand can do this by focusing on the property rights that matter.  Once the country has its political house in order, its experimentation with music copyrights should be expanded into patents and private property.

 

 

No! Thai! – The Bangkok Shutdown

I apologize for the misleading (?) title. I did not mean a popular Thai restaurant on campus. Instead, I wanted to write about the “shutdown” in Thailand. Although I am an Asian student, I did not know that the “shutdown” was going on in Thailand, until I read the article in Wall Street Journal. Assuming that some of my ECON 411 colleagues are in the same page, I would first like to give a brief background of this shutdown.

The anti-government “shutdown” began in January 13th, 2014 in Bangkok, the capital city of Thailand. According to the article in CNN (Thailand braces for looming Bangkok ‘shut down’), the shutdown began by anti-government protesters vow to occupy key Bangkok locations for a month in order to give an end to the political deadlock in Thailand. The protestors especially did not like the government’s attempt to pass a controversial amnesty bill, which was trying to save prime minister’s older brother who is an overthrown prime minister due to 2006 military coup. The government decided to have a new election in February 2nd, but it did not mollify protesters who are boycotting the votes right now.

So why is this a big deal in Thailand economy? According to Reuter’s article Toyota may rethink Thai investment plans if crisis lingers, Toyota may reconsider investing up to 609 million dollars and could even cut production, if political unrest drags on. Toyota, the largest car manufacturer in Thailand, is producing 800,000 vehicles a year in Thailand. It had plans to grow its annual production to 200,000 in three or four years, but now they are reconsidering the plan as car sales can be affected by the political situation. Toyota states that fewer visitors are going to the showrooms after the shutdown. )

Thailand is one of the most popular tourism country in Southeast Asia. Because of the shutdown, the number of tourists will decrease and it will affect Thai economy negatively as well. According to Wall Street Journal Article Thailand Poised to Cut Rates, Thailand’s central bank is expected to cut interest rate as political unrest continues to engulf the exporters of automobiles and electronics. The Bank of Thailand cut interest rates by 0.25 % to 2.25% already, and planning to cut by 0.25% as Thailand is currently not experiencing rapid inflation. Thailand is trying to bring back its economy from the shutdown by cutting interest rate. However, I wonder cutting the interest rate is enough to bring the economy back from the shutdown. Government should also convince the people and bring people back to their normal life in order to attract foreign investments and tourists.